Written evidence submitted by CITB [MMC 052]
What are the benefits of MMC and how can they sustainably boost the housing supply?
(Definition: Modern Methods of Construction utilises a range of approaches, such as offsite manufacturing and improvements to the supply-chain, and is intended to produce more, better quality homes in less time.)
CITB is the Industrial Training Board (ITB) for the construction industry in Great Britain (England, Scotland and Wales). CITB uses its research and labour market intelligence to understand the sector’s skills needs, and works with industry and government to make sure construction has the right skills, now and for the future.
CITB is modernising its funding approach to invest in areas that will deliver the best returns for industry, and enable the sector to attract and train talented people to build a better Britain.
The rise in demand for Modern Methods of Construction (MMC), for example demonstrated by the need for more housing and emergence of new technologies, illustrates the importance of innovation for the future of construction. CITB uses its research and insight to understand and support the skills and training needs surrounding MMC and other types of innovation, to help the industry build its future workforce.
Findings below are largely taken from CITB’s report, Faster, Smarter, More Efficient: Building Skills for Offsite Construction. CITB has also funded a number of projects to improve the quality of offsite construction training, and help attract more people into the industry. These projects are live
The Farmer review, ‘Modernise or Die’ refers to a “window of opportunity” for offsite construction in the UK to “domestically grow a new sector and retain the gross value add within the UK economy”. It suggests significant upscaling of offsite construction, underpinned by the likes of meaningful investment in research, development and strategic leadership, initially for the residential sector but with scope to move into other sectors.
Construction is facing a skills shortage, exacerbated by an ageing workforce and a historically limited recruitment pool[1]. CITB’s Construction Skills Network report forecasts the number of new construction jobs required for 2019-23 is 168,500.
This has prompted many construction businesses to employ a mix of skilled and semi-skilled workers from overseas. According to the Labour Force Survey data for 2017, just over 2.25 million people aged 16 to 64 worked in construction in 2017. 14.8% of them were born outside the UK. CITB’s Migration in the UK Construction and Built Environment Sector research found that availability of migrant workers is the key driver for employers. In an uncertain industry dominated by small firms, construction’s use of migrant workers is driven by need. In the midst of Brexit, there is uncertainty as to whether the sector can continue to rely on an injection of labour from other countries.
Offsite construction offers the opportunity to use multi-skilled operatives in factories and onsite, which can be a more efficient and productive way of working. This is likely to require more flexible skillsets. Furthermore, offsite construction has elements which could be more attractive to potential new entrants to the sector in comparison with traditional construction; manufacturing products in a factory environment rather than dealing with the unpredictability of being on site in all weathers, with the related health and safety risks. The increase of MMC allows work to be done where the workforce is, rather than requiring them to move to where the work will be.
The digitalisation of the construction sector and its direct links to offsite in the form of design for manufacture and assembly (DfMA), use of BIM and immersive learning such as VR and AR, is also considered to be a ‘pull’ for new entrants, particularly young people. This could potentially boost entrants into the sector and address the skills shortage.
What are the primary risks to increasing the use of MMC?
Offsite construction relies heavily on a collaborative approach, bringing together designers, engineers, architects, manufacturers and on-site managers and operatives. This approach can be in conflict with the traditional construction sector, which operates predominantly in silos.
Skills and training needs, and qualifications, are also traditionally structured in silos. This means construction sector stakeholders have in recent years identified gaps in training and qualification provision to deliver the holistic skills and knowledge needed for offsite. This is in regard to the quality of training as an identified gap, rather than a skills shortage in terms of workforce numbers.
CITB research found there is a shortage of skilled tutors and assessors with relevant and sufficient knowledge of offsite to be able to deliver high-quality training.
How could the Government, Homes England and local authorities (a) increase demand for MMC to meet its homebuilding targets and (b) support the construction industry in increasing the use of MMC?
There are a number of generic drivers and barriers for growth in offsite construction, as demonstrated in the diagram below, taken from CITB’s offsite report:
For commercial clients, the potential for cost savings is a critical driver. It can take time, however, to gain buy-in at senior level within large client organisations. The larger the project, typically the more economical it is to construct offsite. Many respondents from our offsite survey believe there is unmet need in the commercial market, for projects like shopping centres and airports to be constructed offsite.
Many offsite construction companies believe there are opportunities for growth in the infrastructure and industrial sectors, although compared with housing (which is receiving a strong Government focus) and commercial projects, these are less well-developed. However aspects of HS2, Heathrow expansion and Crossrail present major opportunities for long-term, lucrative offsite approaches.
A survey of 100 construction sector clients took place as part of CITB’s report, to understand the demand for offsite (only clients with existing experience of commissioning offsite construction were surveyed).
The majority of those surveyed first commissioned offsite projects because they felt the work would be quicker and cheaper. In most cases, the main contractors bidding for the work first introduced them to the offsite concept. When asked about their main reasons for continuing to use offsite construction, 36% of client responses suggest it is faster than traditional methods, and 32% of client responses, because it is cheaper. It appears from the survey responses that once introduced to offsite; clients strongly prefer this approach to traditional construction and tend to commit to future offsite work.
Respondents to the survey also found quality improved when commissioning offsite projects:
“By moving much of the work into a factory environment, we saved around two months on the programme compared to traditional site-based methods, with no compromise whatsoever on the quality of the finished building”
“Constructing in a factory-controlled environment enhances quality control and reduces risk from adverse weather conditions, which can affect critical path activities. The high quality modular kiosks are the perfect retail building solutions”
Therefore, Government, Homes England and local authorities need to look at how they can create fertile ground for clients and employers.
How can small and medium sized housebuilders better utilise MMC, including to support innovation and competition in the construction industry?
A survey in CITB’s offsite report found the use of offsite construction to be more common amongst larger firms (32% of respondents), and those operating in specialist construction (23%) and general construction (21%). Usage of offsite is expected to increase slightly among those surveyed, from 16% currently to 18% expecting to in three to five years’ time.
Larger companies expect a higher rate of use of offsite compared with the average – 42% of respondents expect their business to use off-site construction methods in three to five years’ time, compared to only 17% of those employing two to nine people.
This may have an impact on the supply chain (i.e. small and medium-sized companies would require skills and knowledge relating to offsite) given the high use of sub-contracting in the sector.
How can challenges related to access to finance (for both homebuyers and developers) be overcome.
A lack of awareness and understanding has been found to restrict growth of offsite. Long-held perceptions that “pre-fab” is a lower quality product, also undermine the concept of offsite construction among potential clients. In turn this has created barriers to investment into upscaling of offsite construction.
Whilst there are some higher upfront capital costs, such as access to factory space, compared with traditional construction, some clients and some parts of the supply chain do not understand or value the longer-term benefits of reduced whole life costs.
Specific skills and knowledge is required, for example in estimating assets, and mistakes can be costly, which is therefore viewed as a risk. This way of working also requires on-going communication with suppliers, and with the logistics and manufacturing teams, which can be viewed as additional time and responsibility.